The financial intelligence unit (FIU) of Iran, part of the Iranian Finance Ministry, is perhaps one of the most challenged in the world.

Iran was regarded as a rogue state for decades, and has been hit with numerous sanctions and blacklists.

Among the challenges it faces, when it comes to anti-money laundering (AML) and counter terrorism financing (CFT), is that it badly needs to clean up its act and implement new policies and reforms.

The regime also needs to get a decent reputation and hopes to win over Western banks back into the country.

For years, Iran has been lumped in the same ‘toxic basket’ as North Korea, with the Financial Action Task Force (FATF) advising countries to be wary of conducting business with its banks because of its poor AML and CFT controls.

However, following the lifting of sanctions as part of an international nuclear deal a couple of years ago, has progress been made?

The man playing a leading role in getting Iran to transform its AML and CFT regime is Meysam Ahmadabadi, director of Iran’s FIU.

In an interview with KYC360 Editor Irene Madongo, he discusses challenges faced, plans for 2018 and some of the FIU’s highlights of 2017.

Relationships: complicated, but ‘easing now’

Following the lifting of sanctions, Iran made some progress in terms of rebuilding business ties and wooing investors.

It has, for example, signed major trade deals and welcomed visits from industry giants and finance ministers from various countries, including EU member states.

However, some say progress has been relatively slow, and it has struggled in areas such as winning over some large Western banks, which have held back from Iran mainly because of fears of being penalised by the United States strict sanction regime.

“Political issues may have an impact but we focus only on technical issues” Ahmadabadi said, “I believe we have had some success and we are on the right way. We are positive about 2018.”

“I believe that we could have more cooperation with others. We could also follow-up on conversations that we have had previously and move forward.”

Ahmadabadi said the UK Treasury department has been speaking to his country, including the Central Bank and other Financial institutions, about financial services and he is positive about “re-restabilising bonds between the United Kingdom and Iran.”

Looming deadlines

On the global scene, one of the issues Iran has sought was to get FATF’s counter measures against it lifted.

This was granted in 2016, after Iran said it would adopt an Action Plan to address strategic AML/CFT deficiencies, and seek technical assistance in the implementation of the Action Plan.

The Action Plan expires on 31 January 2018 – just weeks away – by which time Iran needs to have completed its implementation, addressing all remaining AML/CFT deficiencies.

At its February 2018 meeting, FATF will assess the progress made by Iran and ‘take appropriate action’.

However, it appears to be a tough race to beat the deadline. Will Iran make it on time?

“We are doing our best to implement all remaining items of the Action Plan by its deadline on January 31, 2018,” he said.

New banking checks and addressing corporate secrecy

Ahmadabadi, sounded upbeat about 2018 and wants to see changes made in key aspects of AML/CFT.

“We want to improve on the subject of customer due diligence (CDD), enhanced due diligence and also on the issue of beneficial ownership,” he said.

“Over the last month, early December, we were visited by experts from other countries [such as from the] EU i.e. Germany, Belgium, Italy, UK, Denmark, France and Netherlands.”

“We have had some great assistance from experts from the United Kingdom and other European countries, who have visited Iran and helped us in regard to these areas,” he said.

The subject of beneficial ownership is becoming increasingly important in the AML field.

Anti-corruption campaigners say it is vital to know who the beneficial or true owners of firms are in order to crackdown on corporate secrecy and illicit cash flows.

The UK and EU advocate for this information to be publicly accessible, however other jurisdictions maintain that access to such information should be restricted to law enforcement and certain agencies.

AML and CFT hightlights

Despite the challenges, the FIU believes it scored some goals in 2017.

Asked what were some of the highlights for the FIU in 2017, Ahmadabadi said: “We made some great accomplishments in 2017 on the regulatory side, of which I am proud of. ”

“In October 2017, Cabinet approved the Bill of Amendment to the Countering Financing of Terrorism Act, which [amongst other things], lays out a legal basis for the confiscation of assets or funds to commit terrorism financing,” he said.

“This law is important, another change it brings in is that it widens the terrorism financing offence to terrorist activities committed not just inside Iran , but outside too, provided that dual criminality is [undertaken].”

In early November 2017, Cabinet approved the Bill of Amendment to the Anti-Money Laundering Act, which addresses money laundering as a stand-alone offence and the current lack of appropriate procedures for the confiscation of assets.

“Other achievements [in 2017] have included the adoption of the bills of joining the Palermo Convention and the International Convention of the Suppression of Terrorism Financing in 1999 by the Cabinet” he said.

Madongo interviewed Ahmadabadi a few days before the widespread protests across Iran began. When asked on Sunday 31st December if he had any comments to make regarding the protests, he declined to comment.

He also declined to comment on the case of Turkish gold trader Reza Zarrab, who is said to have helped the Iranian government launder millions with the help of countries like Turkey and other states.

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